NEW HAMPSHIRE RULES OF PROFESSIONAL CONDUCT

CLIENT-LAWYER RELATIONSHIP

Rule 1.17.Sale of Law Practice

A lawyer or a law
firm may sell or purchase a law practice, or an area of law practice, including
good will, if each ofthe following
conditions is satisfied:

(a) The seller
ceases to engage in the private practice of law, or in the area of practice that
has been sold, within the State of New Hampshire;

(b) The entire
practice, or the entire area of practice (subject to the clients’ rights under
Rule 1.17(c)(2)), is sold to one or more lawyers or law firms;

(c) The seller
gives written notice to each of the active and inactiveclients of the practice or practice area being sold
regarding:

(1) the proposed sale;

(2) the client's right
to retain other counsel or to take possession of the file; and

(3) the fact that the
client's consent to the transfer of the client's files will be presumed if the
client does not take any action or does not otherwise object within ninety (90)
days of receipt of the notice.

(d) The fees
charged clients shall not be increased by reason of the sale;

(e) If a client
cannot be given notice described in section (c), the representation of that
client shall be transferred to the successor lawyer or law firm for the limited
purpose of protecting the interests of that client as and to the same extent as
the selling or prior lawyer was required to do by these Rules, and the successor
lawyer or law firm shall have a continuing obligation to reasonably attempt to
provide the client with such notice to the same extent as may be required by
these Rules; and

(f) The successor
lawyer or law firm shall take possession of all the inactive or archival files
of the practice or practice area being sold, and shall store, handle, or destroy
them in accordance with the normal operating procedures of the successor lawyer
or law firm and these Rules.Notice
of the transfer of the inactive and archival files shall be published in an
appropriate newspaper of local circulation and shall be provided to the New
Hampshire Bar Association.

Ethics Committee Comment

Subsection (a) of the Rule permits the sale of a private
practice or an area of private practice only if the seller ceases to engage in
practice or in an area of practice within the State.Thus the requirements for sale are not met if the lawyer or
law firm desires to relocate to another area of the State.The individual clients’ files may be
transferred to the successor lawyer or law firm as and when client consents are
received.After the expiration of
the 90 day notice period, the files of all clients who have been given notice,
and who have not opted either to retain other counsel or to take possession of
their files, shall be transferred to the successor lawyer or law firm.

Subsection (e) departs from the ABA Model Rule by requiring
the successor lawyer or law firm
to take possession of the files of
clients for whom consent could not be obtained, and by eliminating the need for
prior court authorization.Such
files shall be transferred for the limited purposes of attempting to effect
actual written notice and protecting the clients’ interests.Such file transfers are considered to be
in the clients’ best interests, and are not considered to violate Rule 1.6.

New subsection (f) clarifies that the successor lawyer’s
obligations with respect to inactive or archival files of the prior lawyer
mirror the duties owed to the successor’s own clients and former clients.

ABA Comment to the Model Rules
RULE 1.17 SALE OF LAW PRACTICE

[1] The practice of law is a profession, not merely a
business. Clients are not commodities that can be purchased and sold at will.
Pursuant to this Rule, when a lawyer or an entire firm ceases to practice, or
ceases to practice in an area of law, and other lawyers or firms take over the
representation, the selling lawyer or firm may obtain compensation for the
reasonable value of the practice as may withdrawing partners of law firms. See
Rules 5.4 and 5.6.

Termination of Practice by the Seller

[2] The requirement that all of the private practice, or
all of an area of practice, be sold is satisfied if the seller in good faith
makes the entire practice, or the area of practice, available for sale to the
purchasers. The fact that a number of the seller's clients decide not to be
represented by the purchasers but take their matters elsewhere, therefore, does
not result in a violation. Return to private practice as a result of an
unanticipated change in circumstances does not necessarily result in a
violation. For example, a lawyer who has sold the practice to accept an
appointment to judicial office does not violate the requirement that the sale be
attendant to cessation of practice if the lawyer later resumes private practice
upon being defeated in a contested or a retention election for the office or
resigns from a judiciary position.

[3] The requirement that the seller cease to engage in the
private practice of law does not prohibit employment as a lawyer on the staff of
a public agency or a legal services entity that provides legal services to the
poor, or as in-house counsel to a business.

[4] The Rule permits a sale of an entire practice attendant
upon retirement from the private practice of law within the jurisdiction. Its
provisions, therefore, accommodate the lawyer who sells the practice on the
occasion of moving to another state. Some states are so large that a move from
one locale therein to another is tantamount to leaving the jurisdiction in which
the lawyer has engaged in the practice of law. To also accommodate lawyers so
situated, states may permit the sale of the practice when the lawyer leaves the
geographical area rather than the jurisdiction. The alternative desired should
be indicated by selecting one of the two provided for in Rule 1.17(a).

[5] This Rule also permits a lawyer or law firm to sell an
area of practice. If an area of practice is sold and the lawyer remains in the
active practice of law, the lawyer must cease accepting any matters in the area
of practice that has been sold, either as counsel or co-counsel or by assuming
joint responsibility for a matter in connection with the division of a fee with
another lawyer as would otherwise be permitted by Rule 1.5(e). For example, a
lawyer with a substantial number of estate planning matters and a substantial
number of probate administration cases may sell the estate planning portion of
the practice but remain in the practice of law by concentrating on probate
administration; however, that practitioner may not thereafter accept any estate
planning matters. Although a lawyer who leaves a jurisdiction or geographical
area typically would sell the entire practice, this Rule permits the lawyer to
limit the sale to one or more areas of the practice, thereby preserving the
lawyer's right to continue practice in the areas of the practice that were not
sold.

Sale of Entire Practice or Entire Area of Practice

[6] The Rule requires that the seller's entire practice, or
an entire area of practice, be sold. The prohibition against sale of less than
an entire practice area protects those clients whose matters are less lucrative
and who might find it difficult to secure other counsel if a sale could be
limited to substantial fee-generating matters. The purchasers are required to
undertake all client matters in the practice or practice area, subject to client
consent. This requirement is satisfied, however, even if a purchaser is unable
to undertake a particular client matter because of a conflict of interest.

Client Confidences, Consent and Notice

[7] Negotiations between seller and prospective purchaser
prior to disclosure of information relating to a specific representation of an
identifiable client no more violate the confidentiality provisions of Model Rule
1.6 than do preliminary discussions concerning the possible association of
another lawyer or mergers between firms, with respect to which client consent is
not required. See Rule 1.6(b)(7). Providing the purchaser access to detailed information
relating to the representation, such as the client's file, however, requires client
consent. The Rule provides that before such information can be disclosed by the
seller to the purchaser the client must be given actual written notice of the
contemplated sale, including the identity of the purchaser, and must be told
that the decision to consent or make other arrangements must be made within 90
days. If nothing is heard from the client within that time, consent to the sale
is presumed.

[8] A lawyer or law firm ceasing to practice cannot be
required to remain in practice because some clients cannot be given actual
notice of the proposed purchase. Since these clients cannot themselves consent
to the purchase or direct any other disposition of their files, the Rule
requires an order from a court having jurisdiction authorizing their transfer or
other disposition. The Court can be expected to determine whether reasonable
efforts to locate the client have been exhausted, and whether the absent
client's legitimate interests will be served by authorizing the transfer of the
file so that the purchaser may continue the representation. Preservation of
client confidences requires that the petition for a court order be considered in
camera. (A procedure by which such an order can be obtained needs to be
established in jurisdictions in which it presently does not exist).

[9] All elements of client autonomy, including the client's
absolute right to discharge a lawyer and transfer the representation to another,
survive the sale of the practice or area of practice.

Fee Arrangements Between Client and Purchaser

[10] The sale may not be financed by increases in fees
charged the clients of the practice. Existing arrangements between the seller
and the client as to fees and the scope of the work must be honored by the
purchaser.

Other Applicable Ethical Standards

[11] Lawyers participating in the sale of a law practice or
a practice area are subject to the ethical standards applicable to involving
another lawyer in the representation of a client. These include, for example,
the seller's obligation to exercise competence in identifying a purchaser
qualified to assume the practice and the purchaser's obligation to undertake the
representation competently (see Rule 1.1); the obligation to avoid disqualifying
conflicts, and to secure the client's informed consent for those conflicts that
can be agreed to (see Rule 1.7 regarding conflicts and Rule 1.0(e) for the
definition of informed consent); and the obligation to protect information
relating to the representation (see Rules 1.6 and 1.9).

[12] If approval of the substitution of the purchasing
lawyer for the selling lawyer is required by the rules of any tribunal in which
a matter is pending, such approval must be obtained before the matter can be
included in the sale (see Rule 1.16).

Applicability of the Rule

[13] This Rule applies to the sale of a law practice of a
deceased, disabled or disappeared lawyer. Thus, the seller may be represented by
a non-lawyer representative not subject to these Rules. Since, however, no
lawyer may participate in a sale of a law practice which does not conform to the
requirements of this Rule, the representatives of the seller as well as the
purchasing lawyer can be expected to see to it that they are met.

[14] Admission to or retirement from a law partnership or
professional association, retirement plans and similar arrangements, and a sale
of tangible assets of a law practice, do not constitute a sale or purchase
governed by this Rule.

[15] This Rule does not apply to the transfers of legal
representation between lawyers when such transfers are unrelated to the sale of
a practice or an area of practice.